Question

In: Economics

What does society do to undermine the macroeconomic impacts of the chaotic nature of continuous product...

What does society do to undermine the macroeconomic impacts of the chaotic nature of continuous product differentiation by monopolistically competitive firms?

Solutions

Expert Solution

Answer:- Monopolistic comptetive firms refers to the it is a market structure, which share the feature of both perfect compteation market and monopoly competation market. Monopolistic comptetion firms refers to a market situation in which there are large number of buyers and sellers of differentiated products. for example adidas is example monopolistic comptetion because they have the aspect that a perfect comptetion has except their product are not exactly like there comptetiors such as asics, nike.

Explanion of product differentiation by monopolistic competitive: The monopolisic firms charge the different prices for the different products ecah product has its own feature and also for compteting against the others firms in the industry. The demand curve is flatter of different product because the consumer change their purchasing behaviour according to the different product proposal and the productoffering the same in case of same product and offering therefore demand curve is flatter in case of differention of product.

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